Sunday, 15 August 2010

extinction of the labour class

The U.S. has 15 million officially unemployed workers and additional tens of millions who aren’t working and aren’t looking for a job. Could these folks be the draft horses of the 21st century?

Here's the gist: worries about disappearing labor markets can probably be ignored; such worries are typical in times of technological change, but the reality is that in many cases demand for labor increases. But the nature of labor changes, and there are losers. Internal combustion engines eventually replaced draft horses in the early 20th century because the cost to operate engines dropped below the cost of feeding horses. Perhaps labor has now changed so that certain individuals simply haven't the capabilities to make it in the present market.

I have a fondness for outlandish comparisons, but even so, the comparison seems particularly crass. People aren't horses. There's an implication that these people don't deserve jobs because they don't have salable skills.

Let's take a closer look at the basic claim: there is a gap in the labor market large enough to swallow 5% of the population of the US. That is, these individuals are not qualified for the jobs that provide the level of compensation they desire. Furthermore, they are unwilling to take jobs that don't provide that level of compensation.

Now things seem more reasonable. If I lost my (hypothetical) $30,000/year job, I would be leery of replacing it with a (hypothetical) $15,000/year minimum wage job -- I wouldn't be able to pay my (hypothetical) bills. I'd keep looking.